Estonia expands defense industry and investment platform

Estonia is strengthening its position as a hub for defense and security investments by expanding its capacity to develop, test, and manufacture defense technology. Driven by geopolitical tensions and cyber threats, the country is leveraging its expertise in technology and cybersecurity to build a broader industrial ecosystem.

In 2026, Estonia's defense spending is projected to reach 5.4 percent of its GDP, totaling approximately 2.4 billion euros. The defense and security industry saw sales of around 750 million euros in 2025, with two-thirds originating from exports. To support this growth, the government is preparing new production facilities, including a planned ammunition factory expected to create up to 1,000 jobs.

Investment support includes product development grants of up to 3 million euros, large-scale investment support up to 20 million euros, and direct co-investment via a 100 million euro defense fund. Additionally, a new unit featuring nine laboratories will be established to support unmanned systems across air, land, and sea environments.